Prudential Financial, Inc. · NYSE:PRU
Prudential Financial — Q3 2024 Earnings Presentation
47 slides from Prudential Financial's earnings presentation, November 2024
Slide 1: 3Q24 Investor Update
3Q24 INVESTOR UPDATE Expanding access to investing, insurance, and retirement security
Slide 2: Prudential Investment Thesis
PRUDENTIAL INVESTMENT THESIS ROCK SOLID DIFFERENTIATED DISCIPLINED Demonstrated financial Thoughtful strategies and Positioned for strength mutually reinforcing business long-term growth system produce a competitive advantage BECOMING A HIGHER GROWTH, MORE CAPITAL EFFICIENT, AND NIMBLE COMPANY 145+
Slide 3: Integrated Set of Businesses at Scale with Long-Term Growth Potential
INTEGRATED SET OF BUSINESSES AT SCALE WITH LONG-TERM GROWTH POTENTIAL Earnings Contribution(1) Key Statistics PGIM 10% Revenues(2): $68B International Businesses $6.0 Adjusted Book Value Per Share(3): $98.71 39% billion U.S. Employees(4): 40K+ Businesses 51% Adjusted Dividend Yield(5): 5% (1) Based
Slide 4: Differentiated Mutually Reinforcing Business System
DIFFERENTIATED MUTUALLY REINFORCING BUSINESS SYSTEM BRAND Deeply connected INSURANCE & businesses that help SCALE RETIREMENT one another grow, unlocking value for QUALITY our shareholders OPEN- ARCHITECTURE SOLUTIONS REINSURANCE/ GLOBAL THIRD-PARTY INVESTMENT MANAGEMENT PGIM CAPITAL EXPERTISE 4
Slide 5: Competitive Advantages Support Strategic Execution
COMPETITIVE ADVANTAGES SUPPORT STRATEGIC EXECUTION Leverage our Strengths: Execute on Strategic Priorities: • Leading global asset manager Invest in growth businesses and markets around the world • Best-in-class liability origination • Cross-business synergies Deliver industry-leading customer and c
Slide 6: Becoming a Higher Growth, More Capital Efficient Company
BECOMING A HIGHER GROWTH, MORE CAPITAL EFFICIENT COMPANY Addressing the Expanding leadership in Retirement Strategies, launching global retirement new products in Japan, and leveraging PGIM’s capabilities opportunity PGIM Growing our U.S. Businesses International Supporting the growth of our Benefit
Slide 7: Maintaining Disciplined Capital Deployment
MAINTAINING DISCIPLINED CAPITAL DEPLOYMENT CREATING Investing in market leading businesses to support growth SUSTAINABLE, PROFITABLE GROWTH AND SHAREHOLDER Returned over $700 million RETURNS to shareholders in 3Q24(1) (1) Capital returned to shareholders in the third quarter of $721 million includes
Slide 8: Supported by Our Rock Solid Balance Sheet
SUPPORTED BY OUR ROCK SOLID BALANCE SHEET Capital supports AA financial strength rating as of September 30, 2024, 2023(1) Highly liquid assets of $4.3 billion(1) Financial strength to support all stakeholders High quality, well diversified investment portfolio Disciplined Asset Liability Management
Slide 9: Ongoing Commitment to Sustainability
ONGOING COMMITMENT TO SUSTAINABILITY Investing Environmental Societal Impact Governance Sustainably Stewardship $1B+ 88% $39.1B 69% donated by The Prudential of non-employee of sustainable emissions reduced since Foundation to help close Directors are diverse(2) investments(3) held by our 2017 basel
Slide 10: Rock Solid
ROCK SOLID DEMONSTRATED FINANCIAL STRENGTH
Slide 11: Robust Approach to Capital & Liquidity Management
ROBUST APPROACH TO CAPITAL & LIQUIDITY MANAGEMENT Risk Appetite Financial Strength Liquidity Framework “AA” standards Significant resources Capitalized to remain for capital available competitive under stress scenarios 11
Slide 12: Significant Capital Position
SIGNIFICANT CAPITAL POSITION Objectives Position Highly Liquid Assets $3 to $5 billion $4.3 billion(1) Consistent with AA objectives Regulatory Capital Ratios remain in excess PICA RBC ratio > 375% Ratios of our objectives(2) Japan solvency margin ratios > 700% Off-Balance Sheet Resources Resource C
Slide 13: Preserving Balance Sheet Strength
PRESERVING BALANCE SHEET STRENGTH, AS WE HAVE DONE FOR 145+ YEARS Stress Parameters Our Toolbox Outcomes • Disciplined ALM and hedging • Maintain appropriate and Equity Market Decline competitive regulatory capital • On-balance sheet capital levels at insurance companies capacity • Maintain adequate
Slide 14: Broadly Diversified, High Quality Investment Portfolio
BROADLY DIVERSIFIED, HIGH QUALITY INVESTMENT PORTFOLIO Portfolio Composition(1) $393 billion Highlights: Other Equities/Alts 5% 5% • Broadly diversified, high quality portfolio with strong Asset Liability Management Government – High allocation to government securities Mortgage Securities (mostly U.
Slide 15: Adjusted Asset Leverage In-Line with Peers
ADJUSTED ASSET LEVERAGE IN-LINE WITH PEERS Asset Leverage(1) Adjustments Adjusted Asset Leverage Exclude non-credit risk assets(2): 12.2x • For example: government bonds, assets supporting experience-rated 8.1x contractholder liabilities(3), and equities, etc. 7.4x 7.0x Exclude Closed Block(3): • Ri
Slide 16: Balanced Approach to Capital Allocation
BALANCED APPROACH TO CAPITAL ALLOCATION Shareholder Distributions 1. Maintain Financial Strength ($ millions) $4,321 $4,144 2. Organic Growth at Attractive Returns $3,245 $3,322 $3,026 $2,500 $2,850 $2,550 $2,500 3. Sustainable and Growing Dividends $2,269 $1,500 $1,000 $2,172 $2,000 $1,500 $1,250 $
Slide 17: Double-Digit Dividend Growth
DOUBLE-DIGIT DIVIDEND GROWTH SUPPORTED BY STRONG EARNINGS AND CASH FLOW COVERAGE ($ per share) Annual Dividends $5.00 $4.80 $4.60 $4.40 $4.00 15% $3.60 CAGR $2.44 $2.80 $3.00 43% $2.17 2023 Dividend $1.60 $1.73 Payout Ratio(1) $1.45 $1.15 $0.58 $0.70 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 18: Differentiated
DIFFERENTIATED THOUGHTFUL STRATEGIES AND MUTUALLY REINFORCING BUSINESS SYSTEM PRODUCE A COMPETITIVE ADVANTAGE
Slide 19: PGIM: A Leading Global Investment Manager
PGIM A LEADING GLOBAL INVESTMENT MANAGER ACROSS A BROAD RANGE OF PRIVATE AND PUBLIC ASSET CLASSES Earnings Contribution(1) Business Highlights: ($ millions) • Diversified capabilities and clients – Capabilities in high growth asset classes, including $788 private RE, private credit, and public fixed
Slide 20: Leadership Positions Across Investment Platform
PGIM LEADERSHIP POSITIONS ACROSS INVESTMENT PLATFORM Product Mix by Asset Management Fees Scale Across Markets 5% #3 #6 #10 33% Alternatives Real Estate Manager Defined Benefit Defined Contribution 21% Worldwide Assets Assets 22% Differentiated Investment Strategies 12% #1 REITs #4 Emerging Market D
Slide 21: Benefits from Large and Diverse Credit Platform
PGIM BENEFITS FROM LARGE AND DIVERSE CREDIT PLATFORM Private Credit Public Credit 800+ investment professionals Corporate (Direct Lending, Mezzanine, seeking income opportunities across Investment Grade, Below Investment Grade) Investment Grade Corporates / Core the credit spectrum Real Estate Debt
Slide 22: Broad Business Portfolio (U.S. Businesses)
U.S. Businesses BROAD BUSINESS PORTFOLIO WITH ROBUST LIABILITY ORIGINATION CAPABILITIES Earnings Contribution(1) Business Highlights: ($ millions) • Diverse customer base with further growth potential across demographics • Complementary solutions across businesses U.S. Businesses • Strong multi-chan
Slide 23: Leading Distribution Model
U.S. Businesses LEADING DISTRIBUTION MODEL WITH END-TO-END CUSTOMER ENGAGEMENT Distribution through a Ability to meet customers wide range of channels where and how they want In Person Hybrid Digital • Financial professionals Individuals • Direct-to-consumer • Pension plan sponsors Institutions • Re
Slide 24: Market Leader in Japan
International Businesses MARKET LEADER IN JAPAN WITH EXPANDING PRESENCE IN GROWTH MARKETS Earnings Contribution(1) Business Highlights: ($ millions) • Best in class, profitable Japanese franchise consistently maintaining market leadership position $3,112 • Expand in select, high growth emerging Inte
Slide 25: Attractive Mix of Developed and Emerging Markets
International Businesses ATTRACTIVE MIX OF DEVELOPED AND EMERGING MARKETS PROVIDE LONG-TERM GROWTH Developed: Japan Emerging Markets • Highly productive distribution system; • Expanding economies and rising affluent world class captive agents, and middle class: Latin America, China, complemented by
Slide 26: Disciplined
DISCIPLINED POSITIONED FOR LONG-TERM GROWTH
Slide 27: Execution on Strategy Driving Growth
PGIM EXECUTION ON STRATEGY DRIVING GROWTH Expanding alternatives platform Investing in next-gen retail and high-net worth (HNW) Growth opportunities from: Capitalizing on growing demand for solutions Broadening geographic footprint internationally 27
Slide 28: Growth in Alternatives
PGIM GROWTH IN ALTERNATIVES Market Opportunity(1) PGIM’s Positioning Key Growth Initiatives ($ trillions) • Formed PGIM Private Total Alternatives, bringing together the 10% $337B Alternatives(2) firm’s private alternative CAGR $29.2 capabilities • Broadened private alternative capabilities with acq
Slide 29: Investing in Next Generation Retail & HNW Growth
PGIM INVESTING IN NEXT GENERATION RETAIL & HNW GROWTH • HNW Alternatives platform has dedicated offerings across RE, direct lending, and alternative credit HNW • Acquired Custom Harvest, a differentiated tax-managed direct index offering • 42 active ETFs offered since launching platform in 2018 Acti
Slide 30: Capitalizing on Growing Demand for Solutions
PGIM CAPITALIZING ON GROWING DEMAND FOR SOLUTIONS • Experienced insurance partner well versed in capital requirements and asset-liability management Third-Party Insurance • Closed $10B Prismic reinsurance transaction $88B in Assets • Manage third-party insurance AUM across 100+ clients • Pension sol
Slide 31: Broadening Geographic Presence in Key Markets
PGIM BROADENING GEOGRAPHIC PRESENCE IN KEY MARKETS With 1,400+ investment professionals located across 42 offices in 19 countries, our experts are present in key financial centers around the world. EMEA ASIA $110 PACIFIC AMERICAS Billion in AUM $233 $1,056 Billion in AUM Billion in AUM • Top 4 forei
Slide 32: Building on a Strong Core
U.S. Businesses BUILDING ON A STRONG CORE Strengthening our foundational businesses Growth Enhancing customer and opportunities advisor experiences from: Expanding in our chosen markets to accelerate growth 32
Slide 33: Strengthening Our Foundational Businesses
U.S. Businesses STRENGTHENING OUR FOUNDATIONAL BUSINESSES • Expanding access to retirement security, broadening distribution through new Retirement relationships, platforms, and advisors Strategies • Delivering industry-leading strategies for protected growth and income that create stakeholder value
Slide 34: Enhancing Capabilities to Simplify Customer and Advisor Experiences
U.S. Businesses ENHANCING CAPABILITIES TO SIMPLIFY CUSTOMER AND ADVISOR EXPERIENCES Building a culture of continuous improvement… Process Customer Digital Simplification and Onboarding Enablement Automation Optimization …to drive enhancements for customers and advisors while realizing cost savings 3
Slide 35: Expanding in Chosen Markets to Accelerate Growth
U.S. Businesses EXPANDING IN CHOSEN MARKETS TO ACCELERATE GROWTH As more individuals near retirement… …many are financially unprepared How we solve it and grow: • Simplified, affordable, and accessible products +55% • Complementary distribution 85M $40T Unprotected nest egg assets channels that meet
Slide 36: Expanding Market Share
International Businesses EXPANDING MARKET SHARE Continuing market leadership in Japan Growth opportunities from: Expanding our presence in select, high growth emerging markets 36
Slide 37: Well Positioned for Continued Outperformance in Japan
International Businesses WELL POSITIONED FOR CONTINUED OUTPERFORMANCE IN JAPAN Adept at Highly Skilled Customer Product Distribution Focused Evolution 37
Slide 38: Leverage Our Partnerships with Market-Leading Companies
International Businesses LEVERAGE OUR PARTNERSHIPS WITH MARKET-LEADING COMPANIES FOR FUTURE GROWTH IN EMERGING MARKETS Latin America Africa Asia Brazil South Africa China Leading provider of integrated Largest private sector bank in Brazil and a independent advice together with leading financial ins
Slide 39: Prudential Investment Thesis
PRUDENTIAL INVESTMENT THESIS ROCK SOLID DIFFERENTIATED DISCIPLINED Demonstrated financial Thoughtful strategies and Positioned for strength mutually reinforcing business long-term growth system produce a competitive advantage BECOMING A HIGHER GROWTH, MORE CAPITAL EFFICIENT, AND NIMBLE COMPANY 145+
Slide 40: Appendix
APPENDIX
Slide 41: Sources of Rankings
SOURCES OF RANKINGS BUSINESS MARKET POSITION SOURCE Pensions & Investments Top Real Estate Managers list, published #3 Real Estate Manager October 7, 2024. AUM as of June 30, 2024. Participation in the ranking is voluntary. #1 REITs #2 Real Estate Debt #2 Privately Placed Debt #4 Emerging Market Deb
Slide 42: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain of the statements included in this presentation, including those relating to Prudential Financial, Inc.’s and its subsidiaries’ financial strength, strategy, growth prospects and market opportunities, planned transactions, our plans to become a higher growth, less
Slide 43: Non-GAAP Measures
NON-GAAP MEASURES This presentation includes references to adjusted operating income, adjusted book value, and adjusted operating return on equity, which is based on adjusted operating income and adjusted book value. Consolidated adjusted operating income, adjusted book value, and adjusted operating
Slide 44: Non-GAAP Measures (Continued)
NON-GAAP MEASURES (CONTINUED) Realized investment gains (losses) within certain businesses for which such gains (losses) are a principal source of earnings, and those associated with terminating hedges of foreign currency earnings and current period yield adjustments, are included in adjusted operat
Slide 45: Earnings by Business
EARNINGS BY BUSINESS Twelve ($ millions) Months Ended 9/30/2024 Adjusted operating income (loss) before income taxes PGIM $ 788 U.S. Businesses: Institutional Retirement Strategies 1,861 Individual Retirement Strategies 1,970 Group Insurance 314 Individual Life (140) Total U.S. Businesses 4,005 Inte
Slide 46: Reconciliations Between Adjusted Operating Income and the Comparable GAAP Measure
RECONCILIATIONS BETWEEN ADJUSTED OPERATING INCOME AND THE COMPARABLE GAAP MEASURE Twelve Months ($ millions, except per share data) Ended 9/30/2024 Net income attributable to Prudential Financial, Inc. $ 4,101 Income attributable to noncontrolling interests (2) Net income 4,099 Less: Earnings attrib
Slide 47: Reconciliations Between Adjusted Book Value and the Comparable GAAP Measure
RECONCILIATIONS BETWEEN ADJUSTED BOOK VALUE AND THE COMPARABLE GAAP MEASURE ($ millions, except per share data) September 30, 2024 GAAP book value $ 30,416 Less: Accumulated other comprehensive income (AOCI) (4,844) GAAP book value excluding AOCI 35,260 Less: Cumulative change in fair value of funds